One of the most aggressive moves a contractor can make mid-project is to characterise a regulatory approval requirement as a “legislative change” — and then bill the Principal for it under Cl.49.

We saw this play out on the a major NSW road upgrade project. The dewatering permit situation is a textbook example of how this argument gets constructed, why it’s often wrong, and how Principals can defend against it. The key, as it turned out, was getting written confirmation from the regulator before the contractor’s legal team had framed the narrative.

What Cl.49 Actually Says

Cl.49 of GC21 provides that where there is a change in the requirements of a Legislative Requirement after the Reference Date, and that change increases the cost of carrying out the work, the Principal bears that cost as an adjustment to the Contract Price.

The critical word is change.

The provision doesn’t say the contractor is entitled to recover costs for any regulatory requirement they didn’t know about at tender. It says the requirements must have changed after the Reference Date. If the legal obligation existed at the date the contractor priced the work, Cl.49 doesn’t apply — regardless of whether the contractor identified it.

This distinction sounds simple, but in practice the contractor’s argument often blurs it deliberately.

How the Argument Gets Built

The typical Cl.49 argument runs like this:

“We were not required to obtain this approval when we tendered. The requirement only became apparent to us [or: was only imposed on us] after we commenced work. This is a change in legislative requirements at the Principal’s cost.”

The sleight of hand is in the phrase “became apparent to us.” The contractor’s awareness of the requirement is not the same as the requirement coming into existence. Requirements that pre-existed the Reference Date but weren’t identified in the contractor’s due diligence are not legislative changes — they’re contractor risk.

Under GC21, the contractor is responsible for satisfying all Legislative Requirements relevant to the carrying out of the work (Cl.12.2). That obligation includes identifying what those requirements are. The contractor can’t convert a failure in their own pre-tender diligence into a Principal-cost event by framing it as regulatory novelty.

What Happened on the project

the Contractor issued a Cl.48.7 notice asserting entitlement to an EOT and Contract Price adjustment arising from the requirement to obtain a Water Supply Work Approval under the Water Management Act 2000 for their dewatering works.

the Contractor’s position: this was a post-contract legislative requirement that they couldn’t have anticipated at tender.

The problem with that position: the the project’s environmental assessment — part of the contract documents — expressly identified the requirement to obtain approvals for in-stream dewatering works. The approval obligation wasn’t hidden in obscure legislation. It was in the environmental assessment that formed part of the Principal’s document register.

Even setting that aside, the Water Management Act 2000 framework under which the approval was required had not changed between tender and the time the Contractor commenced in-stream works. The requirement existed. the Contractor’s cofferdam methodology — their choice of construction approach — was what triggered the application of that requirement to their specific activities.

The Critical Move: Get Agency Confirmation in Writing

Our strongest factual anchor was a written confirmation from the relevant regulatory agency that a Water Supply Work Approval had been required under the existing Water Management Act 2000 framework at the time the contract was awarded.

This wasn’t a new law. This wasn’t a new approval regime. The same statutory framework that applied at tender applied when the Contractor started work. the regulator confirmed it in writing.

That piece of paper changes everything in a dispute.

Without agency confirmation, the Principal is in an argument about statutory interpretation — which requires lawyers, which takes time, and which carries risk. With agency confirmation, the question of whether the legal requirement existed at tender is answered by the regulator, not by competing legal opinions.

If you’re facing a Cl.49 claim on a project, your first move should be to contact the relevant agency and ask them directly: was this requirement in effect at the time of the contractor’s Reference Date? Get the answer in writing. Do it before the contractor’s legal team has framed the narrative and before any claim is formally lodged.

The Causation Argument: Methodology Choice as Contractor Risk

Even where a regulatory requirement exists and applies, there’s a second line of defence: who caused the approval to be required?

In this case, the Water Supply Work Approval requirement was triggered by the Contractor’s choice to use a cofferdam construction methodology for in-stream works. A different methodology — one that didn’t involve in-stream structures — may not have triggered the same approval pathway.

The methodology was the Contractor’s operational choice. It wasn’t directed by the Principal. It wasn’t specified in the contract. the Contractor selected the approach, the Contractor’s approach triggered the regulatory requirement, and the Contractor’s failure to identify and obtain the approval before commencing created the delay.

Under Cl.12.2, the contractor is responsible for satisfying all Legislative Requirements. That obligation extends to identifying what approvals their chosen construction methodology requires. When the contractor’s own method choice is the causative event, attributing the resulting regulatory delay to the Principal requires the contractor to argue that their methodology was effectively directed by the contract — which is a much harder position to sustain.

What to Do When You Receive a Cl.49 Notice

When you receive a Cl.48.7 notice framing a regulatory issue as a Cl.49 legislative change event, here’s the checklist:

1. Identify when the requirement came into existence
Pull the relevant legislation or regulation. When did the approval requirement first apply to this type of work? If it pre-dates the Reference Date, the Cl.49 argument fails on its face.

2. Check the contract documents
Was this approval requirement identified in the REF, the environmental assessment, the design documents, or any of the contract’s reference documents? If so, the contractor’s “we didn’t know” argument is significantly weakened.

3. Contact the agency in writing
Ask directly: was this requirement in effect at [Reference Date]? Has the requirement changed since [Reference Date]? Get the answer in writing and keep it.

4. Identify the causative methodology
What triggered the specific approval requirement? Was it the contractor’s chosen construction approach? If so, how was that methodology selected — was it directed, specified, or was it the contractor’s choice?

5. Check Cl.50.9
Was the Cl.48.7 notice given within the required timeframe? Cl.50.9 applies late notice penalties to claims for delay. An out-of-time notice doesn’t necessarily extinguish the claim, but it’s a factor in the assessment and should be noted in your response.

The Response Framework

the Principal’s response to the Contractor’s notice did not accept any entitlement under Cl.49, Cl.50.1.1, or for any EOT or delay cost. The response set out:

  • The Water Management Act 2000 framework pre-existed the Reference Date (the regulator confirmation attached)
  • The the project’s environmental assessment identified the approval requirement in the contract documents
  • the Contractor’s cofferdam methodology — not any change in legislation — was the causative event
  • the Contractor’s obligation under Cl.12.2 extended to identifying and obtaining this approval before commencing in-stream works
  • All rights reserved

Short. Clause-referenced. Factually grounded. That’s the template.

The Broader Lesson

The Cl.49 argument is attractive to contractors because it recharacterises a contractor-risk item as a Principal-cost event. Done well, it sounds compelling: “There was a regulatory change, we couldn’t have known, this is your problem.”

The defence is almost always the same: establish that the requirement pre-existed the tender date, get it confirmed by the regulator in writing, and show that the contractor’s own methodology or due diligence failure was the causative event. In that sequence. Before the claim is formally lodged.

The window to get agency confirmation is narrower than you think. Move quickly.

If You’re the Contractor: When Cl.49 Actually Works

The Principal’s perspective above explains how to defeat a weak Cl.49 claim. But Cl.49 exists for a reason — there are genuine legislative change events that are the Principal’s cost, and contractors on GC21 projects need to know how to document and pursue them properly.

What makes a Cl.49 claim strong. The gold standard is a change in the text of the legislation or regulation itself between the Reference Date and the date of impact. A new Act. A new Regulation. An amendment that changed the threshold, the approval pathway, or the requirement entirely. The clearer the “before” and “after,” the stronger the claim. Pull the legislative history — the NSW Legislation website keeps historical versions — and document exactly what changed and when.

Separate the legislative change from your methodology. The weakest Cl.49 arguments conflate two things: a genuine change in the legal framework and the contractor’s chosen construction approach. If you can make the argument without any reference to how you decided to build it — if the requirement would have applied to any contractor using any reasonable methodology — the claim is much harder to defeat. If the approval requirement is tied specifically to your chosen method, you need to either justify the methodology as the only reasonable approach or accept that the causation runs through your own decision.

Get your own agency letter. This cuts both ways. If a Cl.49 event is genuine, getting written confirmation from the regulator that the requirement changed after the Reference Date is exactly as powerful for the contractor as it is for the Principal. Contact the agency. Put the question in writing: “Was this approval requirement in effect under this specific framework at [Reference Date]? If not, when did it come into effect?” Their answer is your factual anchor, and it eliminates the interpretation argument.

Time the Cl.48.7 notice correctly. Under Cl.50.9, late notices attract penalties. You need to give the Cl.48.7 notice as soon as practicable after becoming aware of the circumstance giving rise to the claim. On a legislative change event, that means the moment the changed requirement affects your work programme — not months later when you’ve quantified the full impact. Give the notice early, note that full substantiation will follow, and preserve your entitlement.

Don’t undersell a genuine event. If the Water Management Act had genuinely changed after your Reference Date and imposed a new approval requirement that didn’t previously exist, that’s a legitimate Cl.49 event and the Principal’s cost. Don’t let a Principal’s confident rejection letter deter you from pursuing an entitlement that exists. Get your own legal advice, get the agency letter, and push the claim through the process.

The difference between a strong Cl.49 claim and a weak one is documentation and timing. The contractors who recover these costs are the ones who move quickly, get the facts in writing, and separate the legislative change from their own operational choices.

This post is based on real contract administration work on an active NSW infrastructure project. Contract clauses referenced are from GC21 Edition 2. Specific details have been described at a level appropriate for educational purposes.